Domestic markets erase opening gains; trade flat with negative bias

Indian equity benchmarks made slightly positive start tracking gains in Asian peers. But, soon markets turned volatile and erased all gains to enter into red terrain in early deals as selling in Consumer Durables, Auto and TECK stocks. Initially, foreign fund inflows aided the domestic sentiments in the markets. According to the provisional data available on the NSE, foreign institutional investors (FIIs) net bought shares worth Rs 618.37 crore on November 17. Though, some cautiousness came in as Moody's Investors Service said a combination of weak growth in advanced economies, persistent inflationary pressures, the Russia-Ukraine conflict, tight financial conditions, and a subdued growth outlook for China will create a difficult environment for emerging markets (EM) in 2023. As regards India, Moody's said food and fuel remain the main drivers of inflation because they represent a larger share of the consumption basket. For example, rising food prices have contributed to almost half of the growth in headline inflation this year in India.

Most of the Asian markets are trading higher with marginal gains, despite the broadly negative cues from Wall Street overnight, as traders remained cautious amid the mixed cues about the outlook for global interest rates after the recent hawkish comments from several US Federal Reserve officials. Besides, Bank of Japan Governor Haruhiko Kuroda stressed the need to maintain its ultra-loose monetary policy to support the economy after release of data that showed annual core consumer prices surged to a 40-year high in October.

Back home, sugar industry stocks were in focus as industry body ISMA said India has entered into a contract for export of about 35 lakh tonnes of sugar so far in the ongoing 2022-23 season, out of which 2,00,000 tonnes have been shipped last month. In stock specific development, Nykaa gained after TPG Capital offloaded shares worth Rs 1,000 crore via block deal. Besides, shares of PTC India Financial Services surged after the company reported multi-fold jump in net profit to Rs 129.98 crore in the March quarter (Q4FY22).

The BSE Sensex is currently trading at 61693.56, down by 57.04 points or 0.09% after trading in a range of 61641.81 and 61929.88. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.17%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Bankex up by 0.39%, PSU up by 0.14%, Metal up by 0.09%, Oil & Gas up by 0.05%, Industrials up by 0.03%, while Consumer Durables down by 0.60%, Auto down by 0.52%, TECK down by 0.31%, Power down by 0.27%, Utilities down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.66%, Asian Paints up by 0.82%, SBI up by 0.77%, Axis Bank up by 0.66% and Dr. Reddy's Lab up by 0.38%. On the flip side, Mahindra & Mahindra down by 1.29%, Bharti Airtel down by 1.25%, Titan Company down by 0.81%, Maruti Suzuki down by 0.76% and Nestle down by 0.68% were the top losers.

Meanwhile, Moody's Investors Service in its latest report has said that a combination of weak growth in advanced economies, persistent inflationary pressures, the Russia-Ukraine conflict, tight financial conditions, and a subdued growth outlook for China will create a difficult environment for emerging markets (EM) in 2023. It added that next year will present a challenging backdrop for EMs.

As regards India, it said food and fuel remain the main drivers of inflation because they represent a larger share of the consumption basket. For example, rising food prices have contributed to almost half of the growth in headline inflation this year in India. With rupee depreciating against the US dollar, it said the act ion taken by the central bank (Reserve Bank of India) ensures an orderly and limited depreciation. It added that Indian banks' asset quality will continue to improve on recoveries and write-offs of legacy nonperforming loans. In India and China, wind and solar power are the least expensive energy sources, and governments are supporting the transition in the form of mandatory consumption targets or prioritising renewable versus fossil fuels in dispatching energy.

The agency said ‘Our negative outlook on credit conditions for EMs will permeate to sovereigns, companies and banks. Although higher-rated EM issuers have the credit fundamentals to weather the turn in the cycle, weaker entities with ratings of B or below are vulnerable given their limited financing options and reduced capacity to absorb shocks’. It noted that relatively deep domestic financial markets and proactive monetary policies will support the resilience of most EM sovereigns with ratings of Ba or higher. It also said lower-rated sovereigns in particular will experience credit stress amid higher borrowing costs and diminished market access.

The CNX Nifty is currently trading at 18316.35, down by 27.55 points or 0.15% after trading in a range of 18304.95 and 18394.60. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 1.64%, SBI up by 1.08%, Asian Paints up by 0.85%, Axis Bank up by 0.61% and Divi's Lab up by 0.48%. On the flip side, Mahindra & Mahindra down by 1.42%, Apollo Hospital down by 1.38%, Grasim Industries down by 1.38%, Britannia Industries down by 1.34% and Bharti Airtel down by 1.08% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 rose 21.16 points or 0.08% to 27,951.73, Hang Seng surged 104.53 points or 0.58% to 18,150.19, Taiwan Weighted added 20.03 points or 0.14% to 14,555.26, KOSPI advanced 11.76 points or 0.48% to 2,454.66 and Jakarta Composite was up by 26.12 points or 0.37% to 7,071.11. On the other hand, Straits Times fell 10.10 points or 0.31% to 3,275.94 and Shanghai Composite was down by 3.51 points or 0.11% to 3,111.92.